Correlation Between Nasdaq and Mackenzie Aggregate

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Mackenzie Aggregate at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nasdaq and Mackenzie Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Mackenzie Aggregate Bond, you can compare the effects of market volatilities on Nasdaq and Mackenzie Aggregate and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nasdaq with a short position of Mackenzie Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Mackenzie Aggregate.

Diversification Opportunities for Nasdaq and Mackenzie Aggregate

-0.5

Correlation Coefficient

Nasdaq  Mackenzie Aggregate

Very good diversification

The 3 months correlation between Nasdaq and Mackenzie is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Mackenzie Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Aggregate Bond and Nasdaq is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nasdaq Inc are associated (or correlated) with Mackenzie Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Aggregate Bond has no effect on the direction of Nasdaq i.e., Nasdaq and Mackenzie Aggregate go up and down completely randomly.

Pair Corralation between Nasdaq and Mackenzie Aggregate

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 3.3 times more return on investment than Mackenzie Aggregate. However, Nasdaq is 3.3 times more volatile than Mackenzie Aggregate Bond. It trades about 0.05 of its potential returns per unit of risk. Mackenzie Aggregate Bond is currently generating about 0.03 per unit of risk. If you would invest  5,915  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  2,172  from holding Nasdaq Inc or generate 36.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Mackenzie Aggregate Bond

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mackenzie Aggregate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie Aggregate Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Mackenzie Aggregate is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Mackenzie Aggregate

The main advantage of trading using opposite Nasdaq and Mackenzie Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Mackenzie Aggregate can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mackenzie Aggregate will offset losses from the drop in Mackenzie Aggregate's long position.

The idea behind Nasdaq Inc and Mackenzie Aggregate Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.